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Learn How To Avoid Buying More House Than You Can Afford

If you’re looking at realtor.com. If you’re looking at Zillow or Trulia and you’re looking through homes and you … Or you’re looking on MLS through your real estate agent’s news feed and you’re wondering exactly how you could calculate the mortgage on this. You really don’t want to keep going back and forth to your mortgage broker. You really want to be able to calculate or get a good idea of what your mortgage payments may be on your own, then you can use this mortgage calculator.

This mortgage calculator can be found at the bottom of our website. This is mandrellco.com. Scroll all the way down to the bottom of the page, and one of the resources is the mortgage calculator. It will bring you to this page right here.

Let’s assume we’re going through a scenario, you are buying a $300,000 home. I’m going to put in $300,000. Again, there are so many different variations of this that you can go through. It’s really going to be something that you’ll have to discuss with your mortgage broker, with your real estate agent. Find out what program is best for you.

Let’s say you’re in a conventional mortgage and you are putting 5% down, 5% of 300,000 is $15,000. That’s the down-payment. In terms of the interest rate, they’re asking you, “What is your mortgage interest rate?” If you’ve spoken to a mortgage broker already, you should have a very good idea of what interest rates are currently and what you could expect.

If you have not and you just really want to play around with it, what you could do, and what I’ve done, is just basically went to Google and just typed in average mortgage rates. This is what’s come up in the search. I’ve scrolled down here and I’ve just basically seen 30-year fixed mortgage rate as of January 2nd, 2017, is approximately 4%, but a little more. You can click on that, it will bring up Zillow. You could see what interest rates are being offered through different banks.

Again, if you have stellar credit, your number, or your rate may go down. If your credit is less than stellar, that number may go up a little bit more. If you’re putting a substantial amount down, that number may go down. If you’re putting the minimum down, say, 3 or 3.5% in an FHA or mass housing loan, then that number may go up just a tad.

Let’s use a number of let’s say four and an eighth today just to see where we are, 4.125. We’re going to stick with a 30-year fixed. PMI is primary mortgage insurance. Again, when you speak to your mortgage broker, if you’re on a Federal Housing Administration loan or an FHA loan, you will have PMI and your mortgage broker would be able to tell you exactly what that is.

If you are purchasing a condo, most likely on your MLS listing or where you’re pulling the information from, you will be able to pull the condo fee. You can plug that number in as well. If it’s a single family home or a multi-family home, it probably will not have a condo fee.

The taxes are usually listed right on your listing sheet as well. For this example, let’s plug in $25,000. Insurance is not typically listed. Rule of thumb. Again, this is not a hard and fast number, but just to give you a general idea. In Massachusetts, I usually use a number of about a half a percent.

In this case, let’s say we’re purchasing a half a percent of the home value. In this case, it’s 300,000, we’re purchasing at 300,000. One percent would be 3,000. I’m going to say a half of that is 1,500 bucks for my home insurance. I’m going to take all these number, $300,000 purchase price minus my 5% down, which means I’m financing 285 over 30 years at four and an eighth. I’m going to pay taxes per year of $25,000, a little over $200 a month. I’m going to pay insurance of $1,500, or a little over a hundred dollars a month.

I calculate my payment. You’re going to have a principal and interest payment of 1381. If you escrow in. What that means, if you pay all your taxes and insurances with your mortgage payment, which is most common, you’re going to have taxes and insurance for a total payment of 1714.59.

If you bought a house for 300,000 and put 5% down over 30 years at this particular interest rate with these taxes and these insurance, this is what your total mortgage payment would be. This is an excellent way for you to play around with it. If you say, “You know what? I can afford up to about $2,000 on my own. I feel comfortable paying of about $200,000 on my own.” You can now adjust this and go 325, would put me up at about 1835. 375 may put you just over $2,000. Maybe 360 is somewhere where you really want to be.

Maybe you’re looking at homes in the 375 range with the idea of possibly negotiating your way down to a 360 mortgage payment hoping to land a total payment of no more than $2,000 a month where you’re comfortable.

Hopefully this was helpful. Again, you could access this calculator one of two ways. You could go to mandrellco.com, scroll all the way down the bottom of the page and capture the mortgage calculator, or click on the mortgage calculator. In the description of this video, there is also a link to this calculator as well. Hopefully this was helpful. Talk to you soon.

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